Hotels are finding homes in historic office buildings. While these conversion projects come with many benefits, they also pose several challenges.
REPORT FROM THE U.S.—Executive buildings are becoming more attractive to independent hoteliers as conversion opportunities as land costs continue to rise and barriers to entry remain high in several major cities.
“What we’ve found over and over again is that the price of entry into any major city is so high to build brand new. If you have the ability to pick up an existing property that is underutilized, your cost to entry is much lower and you can bring the hotel to market much quicker,” said Gary Johnson, president of architectural firm CambridgeSeven. The firm helped to reposition Boston’s Ames Building, a historic high-rise office building, into the 115-room Ames Hotel.
Lisa Blank, developer/owner of The Troubadour Hotel New Orleans, Tapestry Collection by Hilton, said that location played a key part in her decision to transform a 16-story “shell of steel and concrete” office building located in the city’s central business district.
“The CBD and this building were located between the Bio District, The French Quarter, the Warehouse District and numerous Entertainment and Sports venues,” she said. “In addition, there was a lot of residential under construction, which is always a positive for boutique hotels.”
Gavin Philipp, VP of operations at Charlestowne Hotels, said that when dealing with asset conversions it’s important to define an overall intent of the projects. A level of flexibility is required that opens developers up to more opportunities, he said.
Charlestowne Hotels saw more than one opportunity to convert executive buildings into boutique hotels.
First, The Fairlane in Nashville gave new life to an 80,000-square-foot building.
Also, the company’s Bristol Hotel in Bristol, Virginia, is housed in a building that was built for the purpose of a hotel in the 1920s, but didn’t open as a hotel and instead became Bristol’s Executive Plaza. Then in 2013, the decision was made to convert the structure back to a hotel through a $20-million restoration project.
Several challenges come with converting office buildings, particularly those with some historical significance, sources said.
“Conversions typically present a lot more challenges than ground-up construction,” The Troubadour’s Blank said.
At The Troubadour, the major challenge was to preserve the historic integrity of the building while also creating a modern structure that worked as a hotel and one that guests would enjoy, she said.
That history—or age—can present its own set of issues, sources said.
Buildings constructed before the passage of 1990s Americans with Disabilities Act require retrofitting to bring to compliance for accessibility, Charlestowne’s Philipp said.
“For many commercial properties in urban settings, accessibility has not been a problem because these buildings were designed for easy pedestrian access,” he said. “However, there are many recessed entries where the barrier to design is not the sidewalk but the area beside the door.”
He added that an accessible door needs to have an adjacent area wide enough for wheelchair use. It’s common for this space to not exist with recessed entrances, so one alternative is installation of automatic door openers.
“This is often less expensive than remodeling the original storefront and meets the accessibility requirements of federal and state statutes,” Philipp said.
Materials and design standards in historic structures also can be limiting or require extensive modifications.
CambridgeSeven is working to convert a structure built with concrete floor plates, with a waffle slab—which has deep ribs with a thin top section of concrete, about two and a half inches thick, Johnson said.
“That’s not enough concrete to stop sound from going from one floor to another,” he said. “In a typical hotel, you build a fairly robust floor so that there’s no sound transmission. Here, because it was an old office building, we’re now having to build a sound-isolating system with drywall on every single ceiling of every single floor.”
The prevalence of the waffle slab also means the team can’t cut just anywhere. Cuts must be made through the finished top slab and not through one of the ribs, Johnson said. That’s why the team has had the entire building digitally scanned floor to floor. X-rays were also taken of where reinforcing is on the top slab.
“Then we overlaid that with our planning to make sure that when we lay out a bathroom, for instance, that we don’t hit anything that’s structural,” he said.
Likewise, the Ames Building’s original terracotta floor tiles posed a problem during the hotel conversion. Johnson’s team had to carefully and strategically determine where to drill holes in the floor in order to add plumbing, he said.
To remedy the issue, demolition was completed first so that the team could understand the construction. Then, a structural engineer was brought in. Ultimately, a heating-and-cooling system was installed in a new part of the hotel that was not dependent on holes through the floor.
These types of conversion projects call for a strategy to determine what attributes of the building are worth preserving and which ones need to be adjusted for productive operations, Philipp said. For example, he said guests will love floor-to-ceiling windows and exposed brick but won’t appreciate if their rooms have only one outlet.
“For most historic properties, the construction materials, the form and style of the property, the major architectural or landscape features, and the public spaces constitute elements that should be preserved,” Philipp said. “Every effort should be made to minimize damage to the features that convey a property’s historical significance.”
Many factors make the challenges of conversions worth the effort, sources said.
Sustainability is one key benefit of these projects, Johnson said.
“You’re using an existing building in a city. You’re not taking it down and throwing it in a landfill,” he said. “It is giving new life and meaning.”
Additionally, the reuse of an existing building allows hoteliers to bring their properties to market faster.
For one, “you don’t have to go through as many public approvals. You just have to change the zoning to allow hotel use in an office building,” Johnson said.
Tax incentives can also help to defray the cost of development, Philipp said. The Federal Rehabilitation Tax Credit, also known as the Historic Tax Credit, recognizes the cost associated with repositioning historic buildings and provides a 20% income tax credit to developers of income-producing properties, such as hotels.
There’s also a competitive advantage to converting office buildings to hotels, Philipp said.
“First, buildings constructed before the modern age of prefabrication and mass production are likely to incorporate high-end and well-made materials that help validate a hotel’s service level,” he said.
For example, The Fairlane was built with polished plate glass windows, which was the most common material for commercial windows from the mid-nineteenth century until the 1960s.
“The cost of the polishing process was exorbitant but resulted in exceptionally smooth glass,” Philipp said. “Polished plate glass has since been nearly eliminated from modern construction thanks to the development of float-glass technology, which produces a cheaper, but inferior, product.”
Second, historic buildings offer authenticity—something that Philipp said all hoteliers want for their properties.
“They are at once celebrated and obsolete, American artifacts kept alive through the nation’s love for nostalgia,” he said. “We understand travelers want a departure from everyday life, a place where they can still invent a new persona, a new past, a new destination.”